Oil higher on strong US demand, Fed policy in focus
Oil prices surged on Wednesday, buoyed by robust global demand projections, particularly from the United States, the world’s leading consumer of oil. Despite lingering concerns about inflation in the U.S., market sentiment remained largely unchanged, with expectations still high for potential rate cuts by the Federal Reserve
Oil trades
Brent futures for May climbed 28 cents, or 0.3%, reaching $82.20 per barrel, while April U.S. West Texas Intermediate crude contracts also saw an uptick of 28 cents, or 0.4%, hitting $77.84
OPEC’s Optimistic Outlook Bolsters Oil Market Amidst Fed Rate Cut Speculation
The Organization of the Petroleum Exporting Countries (OPEC) maintained its bullish outlook, projecting robust oil demand growth of 2.25 million barrels per day (bpd) for 2024 and 1.85 million bpd for 2025. Additionally, OPEC revised its economic growth forecast upward for the current year. Further supporting the bullish sentiment, U.S. crude oil and fuel inventories experienced declines last week, according to reports citing American Petroleum Institute data, signaling healthy demand. Despite solid increases in U.S. consumer prices in February, particularly in gasoline and shelter costs, analysts still anticipate potential rate cuts by the Federal Reserve in the summer, which could bolster oil demand. Yeap Jun Rong, a market strategist at IG, noted that the prevailing belief in the market is that current pricing indicates a rate cut may occur in June, contributing to a relatively stable risk environment. The unexpected drawdown in U.S. crude inventories, combined with optimistic growth forecasts from OPEC, continued to provide support to oil prices, according to Yeap. Analysts at Capital Economics echoed the sentiment, maintaining their projection for the Fed to initiate policy easing around June. While oil prices faced pressure in the previous session following an increase in domestic oil output forecasts by the U.S. Energy Information Administration, the impact was mitigated by expectations that output cuts by OPEC+ would counterbalance global oil growth. Additionally, recent drone attacks on Russian facilities, including refineries, contributed to market resilience
